Physician RecruitmentThe Costs to Hire and Return on Investment
By Tony StajduharPresident, Jackson Physician Search
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Optimize Your ROI for Physician Recruitment
Physician Recruitment: The Costs to Hire and Return on Investment By Tony Stajduhar, President, Jackson Physician Search
Healthcare organizations depend on recruiting and retaining physicians and advanced practice providers
to support their mission to offer quality patient care. A critically important vacancy can be costly to the
organization, patients and the community as a whole, impacting healthcare delivery, quality of life and
the local economy.
Maintaining continuity of quality care is of chief importance. Yet, a sense of urgency to fill a costly
vacancy must be combined with a clear understanding of how investing in a strategic recruitment
process can accelerate the fill and reduce the risk of making a poor hire.
Return on investment is a straight-forward concept that is familiar to
leaders in healthcare’s outcomes-driven environment. Yet, in the area
of recruitment, many organizations lack a structured method and accountability for measuring
recruitment success, efficiency and return on investment. Too frequently, recruiters do not know if their
definition of recruitment success is the same as their boss’s or the board’s. As a result, there is no
formalized process to measure efficiency and maximize results.
The return on investment in hiring a top physician is driven by both costs and benefits:
▪ The cost of physician vacancies due to lost revenue and patient loyalty
▪ The cost of an inefficient or ineffective recruitment process through waste and duplication
▪ The benefit of long-term financial and cultural contributions of physicians who fit and stay
Examining each of these drivers will provide a more informed discussion of how medical facilities can be
successful in attracting and keeping high-caliber physicians and advanced practice providers who make
a significant contribution to the mission of the organization.
Benefit (-) Cost = ROI
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The Physician Shortage and Cost of Vacancies Loss of Revenue and Patient Loyalty
The growing physician shortage in the United States raises the stakes and the cost of recruitment. In
tracking the physician shortage, the Association of American Medical Colleges (AAMC) projects shortages
that vary in degrees of magnitude depending on the location, specialty and population served.
Demographics, well outside the control of organizations, are the primary driver of the shortage. In
addition to an aging population requiring greater healthcare resources, the physician workforce is aging.
By 2020, one out of three active physicians will be over 65 years old. A decline in the number of hours
that physicians work is also a reality. AAMC recently recalibrated the projected shortage to reflect new
data showing declines in physician working hours across all age groups, not just millennials.1
The pipeline of new physicians and the longevity of those in the prime of practice are vulnerable to other
mounting pressures. At one end, students are deterred from entering medicine by the burden of
educational debt, now averaging nearly $200,000 at graduation.2 At the other end, the burdens of
regulatory compliance, complexity of reimbursement and administrative overload are prompting
practicing physicians to seek non-clinical work and early retirement.3
High demand and low supply increases competition and makes
producing return on investment for recruiting programs more
challenging than ever. The 2018 Association of Physician Recruiters’
(ASPR) annual survey studied 6,379 recruitment searches, 44% of
which were to replace a departing provider. More than 60% of
active searches were filled by year-end 2017, but 32% remained
open and 8% were cancelled or on hold. With 40% of vacancies unfilled, access and revenue gaps widen.4
Among physician specialties, the largest volume of searches in 2017 was for physicians specializing in
family medicine, hospital medicine, internal medicine, neurology, and urgent care. Three out of four
responding organizations searched for physicians in family medicine (75%), followed by internal
medicine (searched by 58%) and neurology (searched by 55%).
Organizations reported that
40% of vacancies remain
unfilled, leaving gaps in
many in hard-to-fill
subspecialties, as well as in
Primary Care.
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The High Cost of Prolonged Vacancies
Where physician vacancies are concerned, time literally is money.
The time required to fill a vacancy is a key determinant of return on
investment. On an annualized basis, a family medicine physician
can generate $1.5 million in indirect revenue; a urologist can
generate $1.8 million of gross charges. So, for each month a key
position is vacant, a hospital can easily lose $130,000 to $150,000 in revenue.5 Furthermore, the absence
of an established, well-regarded physician inevitably results in some amount of patient migration. The
hospital or medical group loses not only patients already loyal to that doctor, but also future referrals
that might have developed from that continuing relationship between patient and doctor. The potential
long-term impact is even more significant if patients are forced to seek treatment outside of the market
or visit competitors because your facility lacks important services while waiting for a new physician.
ASPR reports that there is tremendous variability in the length of time it takes organizations to fill
searches. For example, the median number of days to fill family medicine searches has remained
stubbornly at 4.3 months for over five years. But organizations report that it takes twice as long to fill a
family medicine search. Likewise, the median length of a search for a medical or surgical specialist may
range between five to 10 months, depending on the specialty and location.
To avoid the high cost of a prolonged vacancy, identify and eliminate barriers to recruitment. Then move
quickly to market with the search when it is optimally positioned and ready to fill.
Evolution of Days to Fill for Physicians
Primary Care Specialty Surgery 2012 2016 2017 2012 2016 2017 2012 2016 2017
Median 131 125 130 148 149 153 184 151 139 Average 195 192 221 223 219 252 283 213 238
25th 62 60 48 80 52 57 90 61 70 75th 246 258 273 282 291 324 336 299 316
Source: In-House Physician Recruitment Benchmarking Report. Executive Summary. Association of Staff Physician Recruiters. 2013, 2017 and 2018 Executive Summary. *Average and percentile data for 2017 available for purchase 2018 via the Association of Staff Physician Recruiters
Each month a key physician
position is vacant, a hospital
can easily lose $130,000 or
more in revenue.
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Cost of Recruitment Inefficiency Reduces Return on Investment
In addition to the cost of the vacancy due to loss of revenue, expenses incurred during the recruitment
process impact return on investment. From the moment a
position is identified until the contract is signed, there may be
up to $250,000 invested in a single candidate, including
marketing, interview expenses, sign-on bonus, and relocation
stipend. Add to this an allocation for full-time equivalent cost of staff and/or professional recruiter fees.
Stewardship of this investment requires careful planning and tracking key metrics over time. The “nuts
and bolts” of an organization’s recruitment process holds the key to improving overall performance and
raising the return on investment by lowering the cost side of the equation.
Performance Benchmarks
Benchmarking the current performance of the recruitment process isolates the true costs of recruitment,
revealing inefficiencies, gaps, and duplications. Organizations that routinely assess and measure their
performance discover opportunities for quick wins, critical course corrections and long-term
improvement.
Use these Standard Metrics to Measure Your Progress and Success
The nuts and bolts of an
organization’s recruitment
process holds the key to
improving overall performance.
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Sourcing Effectiveness
Many organizations cannot quantify the value of their investment in marketing outreach. They may
continue to rely on traditional advertising and direct mail, while struggling to implement social and digital
recruiting technology. Part of the challenge is that their volume of searches is too small to effectively
allocate the cost of multiple sources needed to deliver the required visibility. It is like purchasing a high-
end toolbox that includes expensive power tools, but then using them too infrequently to develop
proficiency and justify the cost.
Search marketing has developed as an art and a science. Measurable feedback and tracking the
effectiveness of sources leads to greater sourcing efficiency and return on investment. However, over-
used tactics lose their effectiveness. For example, a study6 found that that 95% of physicians want job
information by email, but there is too much volume and not enough value. More than one-half of
physicians report high frequency of contact:
▪ 16% receive one solicitation per week
▪ 39% are contacted multiple times per week
Physicians also report that these job opportunities are NOT relevant to their interests.7 In fact:
▪ They receive relevant contact less than 10% of the time.
Many recruiters are not taking the time to segment and efficiently target their audience. This is a costly
mistake, doubling the potential negative return on investment from email: 1) inefficiency wastes time
and money, and 2) physicians will tune it out completely, prolonging the search.
The proliferation of social media offers another avenue for
engagement, as physicians become “digital omnivores.” The majority
of physicians in all career stages are using social networking platforms
for peer-to-peer communication.8 Technology keeps them connected
24/7, both personally and professionally, through multiple devices,
including laptops, tablets, smartphones, and even wearables. The key to leveraging social media to reach
the sought-after, passive candidates is to become a trusted source of fresh, relevant and useful content
delivered in a consistent – and non-commercial – manner within their trusted communities.
87% of physicians ages 26-55
are using social media
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Interview Optimization
The on-site interview is where missed opportunities and hidden expenses lurk for many organizations.
Some organizations do not invest enough time or resources in creating a first-class, personalized and
memorable experience for candidates and their families. Others may attempt an elaborate site visit that
fails because of a disorganized itinerary, unprepared interview team or delayed follow-up. These
mistakes necessitate multiple follow-up visits or risk derailing the candidacy entirely.
The Value of the Physician’s Contribution Recruiting is an Investment in Future Revenue
On the individual-physician level, revenue production based on personal productivity remains the key
driver of a physician’s contribution. Compensation and can be benchmarked against national medians
for expected return on investment, but local variables such as quality incentives, payer mix, clinician
supply/demand and cost of living are important factors to consider.9
Compensation and Revenue
Median Compensation Estimated Revenue (Gross Charges)
MGMA 2018 (2017 data)
Cardiology, Non-invasive $479,882 $141,0798
Emergency Medicine $354,350 $1,072,282
Family Medicine without OB $236,935 $742,932
Gastroenterology $525,003 $2,008,103
General Surgery $415,146 $1,335,972
Hematology / Oncology $468,224 $881,499
Hospitalist: Internal Medicine $289,138 $480,156
Internal Medicine: Ambulatory Only $250,964 $818,015
Neurology $302,827 $853,018
Obstetrics/Gynecology: General $322,900 $1,192,476
Occupational Medicine $239,652 $563,430
Orthopedic Surgery: General $597,914 $1,811,304
Otorhinolaryngology $452,450 $1,676,746
Pediatrics: General $231,539 $735,367
Psychiatry: General $368,868 $504,855
Pulmonary Medicine: General $374,146 $1,090,562
Radiology: Diagnostic $494,584 $1,950,805
Urology $450,000 $1,825,258
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Benchmarks only tell part of the story. A primary care physician, for example, can generate $1,566,165
in indirect revenue. This number includes all hospital revenue including labs, imaging, and hospital
admissions. Primary care providers also generate indirect hospital revenue through referrals to loyal
specialists. Five to ten percent of all primary care visits result in a specialist referral. Gastroenterology,
orthopedics, physical therapy, dermatology, and otorhinolaryngology are the most common. Apply
specific referral ratios to the direct revenue generated by each of these services to calculate the
indirect revenue impact of each primary care provider.10 Viewed this way, the potential for a
physician’s revenue contribution can range up to six times their compensation.
Non-monetary benefits also are part of a physician’s contribution. When a hospital department is fully
staffed, administrators generally observe an improvement in staff morale and overall patient
satisfaction. Consequently, there is less likelihood of patient migration because patients are assured that
their medical needs will be met by well-qualified specialists and sub-specialists in a timely, efficient
manner.
It is also noteworthy that adding a "premier physician" to the medical
staff enhances a hospital's reputation and strengthens the overall
physician recruitment effort. Hospitals benefit from the public and
professional recognition associated with doctors who are well-regarded
in their specialty. In short, the public relations value of hiring a notable
physician is an important component of return on investment.
The reputation for a healthy culture that supports physician retention leads to successful recruitment. A
stable medical staff results from establishing trust and maintaining transparency, from top leadership
through the entire organization. Such an environment supports faster fills, shorter vacancies, lower
turnover and a measurable return on investment. The positive impact of recruiting into a healthy culture
shouldn’t be underestimated. Gallup research 11 shows a direct link between how well employees
understand their organization’s purpose and culture, and performance metrics that are critical in
healthcare. When eight out of 10 employees understand that their role is valued – organizations
achieved significant improvements in key performance metrics:
▪ 33% improvement in quality ▪ 41% reduction in absenteeism ▪ 50% drop in patient safety incidents
Doctors don't work in a
vacuum. Their
contributions extend to
downline service
lines and revenue
generation.
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Incoming physicians contribute to the physical health of residents and the overall health of the local
economy. This is especially true in rural communities. Adding one physician to a community of 10,000
people is associated with a 5.3% reduction in average mortality. A primary care physician supports 26.3
local jobs and nearly $1.4 million in economic input12. They also contribute to the local economy by
buying a home, paying taxes, and using local goods and services. The availability of quality healthcare is
among the top criteria that attract and keep employers in a community.
What Recruiters Can Do Now Implement Key Best Practices
The sense of urgency to hire is important as the physician shortage intensifies. But, it is also important
to balance the cost of a vacancy with the cost of a broken process and risk of a poor hire, which are more
expensive in the long run. By investing in key best practices, organizations become more efficient,
effective and strategic in hiring. Their overall return on investment increases as a result.
Continuously Recruit
Once candidates are identified and interviews are being scheduled, the natural instinct is to stop
recruiting in that specialty. But we caution: keep recruiting until a signed contract is in hand with full
assurance the physician is coming on board. Letting the engine “go cold” at that point in the process can
prove to be far more costly than the investment in continued sourcing.
The reason is two-fold. First, it is practical. Any number of unforeseen events can derail even the most
promising candidate and place the recruitment process back at square one. Second, there is a
psychological component. When a candidate of choice sees recruiting efforts have stopped, their
negotiating leverage goes up and their sense of urgency goes down. Continuing to engage candidates is
a smart move for other reasons. Even if a candidate does not advance to finalist, their positive and
memorable experience with an organization expands your referral network for future needs and in other
specialties.
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Avoid Fixating on Cost Per Hire
The days of open-ended recruitment budgets are long past. Recruitment is not exempt from the need
for transparency and accountability. Viewing a best-practice recruiting process as a “cost” rather than a
strategic investment adversely influences thinking and behavior. Measuring the cost but not the quality
of a hire, prioritizes cost as more important than quality. This can be extremely expensive over the long
term due to turnover, disruption to the practice and loss of patient loyalty.
Engage Resources that Drive ROI
Engage resources that can increase your efficiency. For example, it may be too costly for a single hospital
or community health center to invest in an extensive array of job board postings plus new digital, social
and mobile technology platforms that reach passive candidates effectively. However, a trusted
recruitment partner can cost-effectively deploy these tools. Their resources allow organizations to cast
a wide net for qualified candidates and benefit from their experience and finely honed “fit for hire”
candidate assessment skills. Meantime, the internal team is free to focus on the quality of the interview
process, engage key decision-makers, and keep the contract and credentialing details on track.
Onboarding versus Orientation
The recruitment experience should help the candidate and their family envision their future in the
practice and the community. It should be a preview of the organization’s proactive approach and
seamlessly transition into an equally effective onboarding process. With the clock ticking toward a start
date, too many physicians receive a packet of orientation paperwork instead of the dedicated resources
they need to prepare their practice and engage actively into the community. Keep the lines of
communication and information flowing throughout the interview and negotiation process to accelerate
the hire and enhance the potential for long-term retention.
Once they are signed, be sure they are assigned a navigator who guides them through a holistic
onboarding program that includes mentorship and family integration into the community. There is a
correlation between long-term retention and onboarding programs that start early and last up to one-
year, with a mentor assigned.
In the race against time, the winning strategy leverages efficiency and focuses on fit and retention. A
best-practice approach enables organizations to measure value per hire over time and deliver a
sustainable return on their recruitment investment.
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How to Diagnose and Cure Low Recruitment ROI
Symptom Treatment
Prolonged vacancy
Time kills deals
To accelerate filling the vacancy: ▪ Objectively identify recruitment barriers and do the hard work of removing them ▪ Structure a competitive compensation and benefits package ▪ Deploy multi-channel marketing on a rapid timeline to ensure your position is seen
not only by active lookers, but by passive candidates ▪ Be responsive to candidates from first screening through signed contract and beyond
Inefficient process
Multiple interviews waste time and money
To focus interviews on top candidates: ▪ Position the opportunity competitively and clearly to attract the right candidates for
the right reasons ▪ Assess candidates effectively to remove the “B” candidates ▪ Uncover and address issues in advance ▪ Do not bring a physician in for an interview if deal-killers exist
Missed Opportunities Differentiate yours above all others’
To differentiate your organization: ▪ Tailor the site visit – including the interview team – to create the most favorable and
memorable experience possible ▪ Remember to address the professional, educational, social and personal interests of
the candidate and their family ▪ Ensure that the top leader sells the vision, which is reinforced by the team ▪ Leave no questions unanswered, and prepare to make an offer to the candidate of
choice within 48 hours of the site visit interview
High Turnover
Hire for fit and retention
To improve retention: ▪ Adopt a “hire for fit” approach that includes an objective assessment of cultural fit ▪ Go beyond technical orientation with a robust onboarding program that includes
practice ramp-up, mentorship and family engagement with the community
▪ Check in with new physicians often and ensure that promises made in the course of
the recruitment process are being fulfilled
▪ Provide work/life balance, as well as opportunities for professional development
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Conclusion
What's a doctor worth? Recruiting, hiring and retaining a top-performing physician guarantees continuity of care which will sustain reimbursable revenue, maintain patient satisfaction and contribute to quality healthcare delivery. When measured against the hard and soft costs of not having such a physician in place, the return on investment certainly offsets the expense of bringing the physician on board. That said, resist the temptation to “throw money” at the problem of filling a vacancy. To maximize return on investment, leaders must fully engage and ensure that the recruitment and retention strategy is aligned with an organization’s mission and financial model. The investment in an intentional, outcomes-based, efficient recruitment process applies the highest and best use of resources, achieves higher retention and delivers a healthy financial return. Most importantly, the organization will earn the reputation as an effective organization with a healthy culture - the best recruitment tool of all.
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Key Takeaways
Reduce
Reduce your Interview-to-Hire Ratio from 5:1 to 3:1
for Cost Savings of $12,000
Estimating $6,000 per interview in travel and team hours
Improve Improve your Acceptance Rate from 60% to 90%
for Cost Savings of $16,800
Estimating $30,000 to restart search and resume interviews
Shorten Shorten the Length of a Vacancy by 60 days
for Revenue Gain of $191,357
Based on $1,164,088 average annual revenue of 18 key specialties
Prolong Prolong Physician Retention by Five Years
for Revenue Gain of $5,820,438
Plus the immeasurable contribution of a stable practice with loyal patients
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About the Author
Tony Stajduhar is a nationally recognized leader and innovator in the recruitment of physicians. His
experience started at Jackson & Coker in 1986, and he later developed his own physician recruitment
firm into a national presence. He subsequently worked with HCA to launch an in-house recruitment
team. Upon reuniting with Jackson Healthcare CEO Rick Jackson, Tony returned to Jackson & Coker with
the intent to bring it back to the number one position in the industry. Under his guidance, the company
revolutionized the industry, eliminating ineffective mail strategies and implementing an all-digital
sourcing strategy.
As president of Jackson Physician Search, he leads the fastest growing, most well-respected recruitment
firm which is also known for exceptional customer service and proven results. As a recognized expert,
he was instrumental in changing the image of healthcare recruitment and speaks to national healthcare
industry groups, including Medical Group Management Association, Society for HealthCare Strategy and
Market Development, and numerous regional organizations and state medical associations.
Based in Atlanta, Tony can be reached at [email protected] or (678) 690-7908.
About Jackson Physician Search
Jackson Physician Search specializes in permanent recruitment of physicians and advanced practice
providers to hospitals, health systems, academic medical centers and medical groups across the United
States. The company is recognized for its track record of results built on their clients’ trust in the skills of
their team and the transparency of their process.
Jackson Physician Search attracts and retains the most talented and motivated recruitment professionals
in the industry. The company has been recognized as one of the Best Places to Work by Modern
Healthcare and Fortune, and is certified as a great workplace by the independent analysts at Great Places
to Work®.
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Physician Workforce through 2030
Sources
1 “The Complexities of Physician Supply and Demand 2018 Update: Projections from 2015 to 2030.” IHS Markit for Association of American Medical Colleges. February 2018. 2 Residents Salary & Debt Report 2018." Medscape. July 18, 2018 3 "The Future of Healthcare: A National Survey of Physicians." The Doctors Company. October 2018. 4 “2018 ASPR In-House Physician Recruitment Benchmarking Report.” Executive Summary. Association of Staff Physician Recruiters. October 2018. 5 “How Many Primary Care Physicians Do You Really Need?” HSG. October 2018. 6 “Physician Recruitment Survey Results.” MMS Lists-Medical Marketing Service Inc. October 2018. 7 “Doximity Physician Survey.” Doximity. July 2017. 8 “Digital Doctor Survey.” ZocDoc 2013. 9 “Four Physician Compensation Factors to Watch.” HealthLeaders Media. January 04, 2018. 10 “How Many Primary Care Physicians Do You Really Need?” HSG. October 2018. 11 “Why Healthcare Leaders Should Build a Culture of Development.” Gallup Workplace. March 14, 2018. 12 "Estimate the Economic Impact of a Rural Primary Care Physician." National Center for Rural Health Works, October 2016.